In this episode of “What’s the Risk?”, we examine the historical performance of the Bloomberg AusBond Bank Bill Index, a key benchmark often used as a proxy for cash returns in Australia. This index reflects short-term interest rates and is tracked by ETFs such as BetaShares’ CASH and BlackRock’s BILL. Additionally, the State Street Australian Cash Trust offers a managed fund option that mirrors the index’s performance before expenses. For many, a standard savings account might also yield comparable returns, making cash a familiar investment vehicle.
Cash plays a vital role in everyday spending, but some investors also consider it a long-term option. While it offers safety and stability over the short term—shielding against market volatility—holding cash over extended periods introduces significant risks. Inflation can erode its purchasing power, and over decades, the real return may lag behind other asset classes like stocks or bonds. We explore these dynamics, highlighting how the Bloomberg AusBond Bank Bill Index’s performance provides insight into cash’s reliability and limitations.
This episode aims to educate viewers on balancing the security of cash with its long-term drawbacks, encouraging a strategic approach to incorporating it into broader investment portfolios. Whether through ETFs, managed funds, or savings accounts, understanding cash’s role is crucial for informed financial planning.
Watch the “BILL ETF” video here
This represents general information only. Before making any financial or investment decisions, I suggest you consult a financial adviser to take into account your personal investment objectives, financial situation and individual needs. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are a high net worth investor looking financial advice then you should consider Australia’s best financial advisers, they can help you identify your goals and put in place a reliable strategy to pursue them.
